IBM Re-Balancing Their Portfolio

Gartner's recent report on worldwide IT spending estimates IT spending to grow 3.1% to $3.8 trillion in 2014. Enterprise software is expected to be the strongest growing market, with spending projected to increase 6.8% to $320 billion in 2014. It is followed by a 4.5% growth in IT services to $963 billion. Spending on devices is projected to grow 4.3% this year to $697 billion, while data center systems are projected to grow 2.6% to $143 billion. Telecom services will be the slowest growth segment with the market growing 1.2% to $1,653 billion.

IBM's Financials

IBM's (Nasdaq: IBM) fourth quarter revenues fell 5% over the year to $27.7 billion, missing the market's expectations of $28.27 billion. EPS of $6.13 was, however, ahead of the Street's projections of $5.99. By segment, revenues for the software segment grew 3% over the year to $8.1 billion. Systems and technology segment revenues fell 26% to $4.3 billion and revenues from the IT services unit fell 4% to $9.9 billion. Business services revenues managed to report a marginal growth of 0.6% to $4.75 billion. They ended the year with revenues declining 5% to $99.75 billion and an EPS of $16.99.

For the current year, IBM projected an EPS of at least $18.00, falling marginally short of the Street's projections of $18.02.